TOKYO — Japan revised its initial estimate for economic growth in the January-March quarter, saying Monday that investment by companies was stronger than first thought.
The government said the economy grew an annualized 6.7 percent in the quarter, beating the initial growth estimate of 5.9 percent.
Compared with the previous quarter, the economy expanded 1.6 percent. Japan’s economy, the world’s third largest after those of the United States and China, is expected to contract in the current quarter because of a sales tax increase on April 1, which has sapped some momentum from consumer spending.
Preliminary data showed demand slowing in April. A corresponding decline in imports helped push the current account back into surplus in April for the first time in four months, the Japanese Finance Ministry said Monday.
The surplus in April was 131 billion yen, or $1.3 billion, compared with a current account deficit of ¥782.9 billion in March. Retail sales and corporate spending surged before the tax increase of 3 percentage points, as families and businesses stepped up purchases to avoid paying the higher rate.
The revised gross domestic product data showed private, nonresidential investment rose 7.6 percent in the first quarter compared with a year earlier, up from the original estimate of a 4.9 percent increase.
The higher growth for the first quarter suggests corporate investment may be picking up and could help cushion the effect of the tax increase on the economy.
But growth estimates can vary widely, and the data reported Monday may change again, Capital Economics, a research firm in London, said in a note.
“Revisions between the first and second estimate have historically not brought the data closer to final outcomes,” it said. The government is planning to cut corporate taxes to further encourage investment, which it says will eventually lead to higher wages.
The aim is to end the two-decade slump that followed the collapse of Japan’s “bubble economy” in the early 1990s.
Sustained economic growth will require a recovery in purchasing power through increased wages that would help make up for the higher costs that households face because of inflation and higher taxes, economists say.
So far, most companies are raising bonuses rather than base wages, which have continued to fall and dipped 0.2 percent in April compared with a year earlier.
nytimes.com
The government said the economy grew an annualized 6.7 percent in the quarter, beating the initial growth estimate of 5.9 percent.
Compared with the previous quarter, the economy expanded 1.6 percent. Japan’s economy, the world’s third largest after those of the United States and China, is expected to contract in the current quarter because of a sales tax increase on April 1, which has sapped some momentum from consumer spending.
Preliminary data showed demand slowing in April. A corresponding decline in imports helped push the current account back into surplus in April for the first time in four months, the Japanese Finance Ministry said Monday.
The surplus in April was 131 billion yen, or $1.3 billion, compared with a current account deficit of ¥782.9 billion in March. Retail sales and corporate spending surged before the tax increase of 3 percentage points, as families and businesses stepped up purchases to avoid paying the higher rate.
The revised gross domestic product data showed private, nonresidential investment rose 7.6 percent in the first quarter compared with a year earlier, up from the original estimate of a 4.9 percent increase.
The higher growth for the first quarter suggests corporate investment may be picking up and could help cushion the effect of the tax increase on the economy.
But growth estimates can vary widely, and the data reported Monday may change again, Capital Economics, a research firm in London, said in a note.
“Revisions between the first and second estimate have historically not brought the data closer to final outcomes,” it said. The government is planning to cut corporate taxes to further encourage investment, which it says will eventually lead to higher wages.
The aim is to end the two-decade slump that followed the collapse of Japan’s “bubble economy” in the early 1990s.
Sustained economic growth will require a recovery in purchasing power through increased wages that would help make up for the higher costs that households face because of inflation and higher taxes, economists say.
So far, most companies are raising bonuses rather than base wages, which have continued to fall and dipped 0.2 percent in April compared with a year earlier.
nytimes.com
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